DuPont looks to kill $4B chemours liability-offloading suit

By Cara Salvatore | Law 360 | September 18, 2019

Read the full article by Cara Salvatore (Law 360)

“DuPont is asking a court to end a $4 billion suit by spinoff Chemours over ballooning environmental liabilities, including some that have spurred multidistrict litigation and trials, saying arbitration is Chemours’ only recourse.

DuPont asked a Delaware Chancery judge late Friday to end the suit, in which Chemours is asking for, at minimum, the return of a $3.9 billion dividend payment that was financed by $4 billion in Chemours debt. The dividend’s existence was predicated on an upper liability limit that Chemours now believes was a complete fiction.

DuPont said Friday that their spinoff deal precludes the suit. ‘Chemours’ claims in this action fall squarely within the scope of the mandatory arbitration provision,’ it told a court.

‘If Chemours wanted to repudiate the allegedly nonconsensual, unconscionable separation agreement, it had to do so immediately, not four years later after giving its shareholders [over $1 billion] in proceeds from the deal,’ DuPont said.

Chemours has bragged to the market many times about its profitability, DuPont said.

But Chemours claimed in court papers that if DuPont had disclosed the full extent of the liabilities it was handing off, Chemours would have been insolvent on day one of its existence.

One of Chemours’ examples concerns multidistrict litigation over the chemical PFOA, a key ingredient in the once-ubiquitous nonstick coating Teflon. At the time of the spinoff in mid-2015, DuPont allegedly predicted a $128 million liability from a 3,500-case MDL in which Ohio residents said a PFOA factory’s disposal methods sickened them. Punitive damages were awarded in at least two bellwether trials.

The ultimate settlement in the MDL was for $671 million.

DuPont noted Friday that in August 2017 the two went back to the table and DuPont shelled out another $300 million-plus in connection with that settlement.

Meanwhile, new potential liabilities are appearing in litigation over the PFAS family of fluorochemicals, of which PFOA is a member. ‘PFAS litigation is proliferating,’ Chemours said, with numerous lawsuits filed over the past year or two, representing a large new wave of potential liability.

Another example of allegedly downplayed liability: cleanup of North Carolina’s Cape Fear River. DuPont’s pollution of the river and surrounding groundwater will be cleaned up under a deal Chemours reached with North Carolina earlier this year. But DuPont’s 2015 estimated bill of $2.09 million turned into more than $200 million in reality, Chemours said. And there is still open private litigation. Just Friday, DuPont filed a motion to dismiss residents’ claims for medical monitoring…”

This content provided by the PFAS Project.